Macro and Government Bond Commentary: Yields rise despite heavy borrowing in FY26 as markets position for a 25 bps rate cut in Feb MPC meeting • The 10Y benchmark (6.79 GS 2034) opened little changed at 6.70% despite higher-than-expected gross borrowing in FY26 (at INR 14.82tn vs 14.4tn exp). Yields fell in the morning session despite higher treasury yields as well as on weakness in spot INR (tracking the strength in the USD, with anecdotes of limited RBI intervention in spot). Moves lower in yields were aided by positioning ahead of the MPC meeting outcome this week, with markets hoping for a 25-bps rate cut in the Feb meeting.
